The daily chatter in the markets tends to center around large companies that are often household names. Within dividend circles in particular, several investors hold a significant bias towards larger cap companies. There is primarily one reason why this holds true. Aversion to risk.
Many investors have the ability to take on more risk than they might think. Factors that influence an investor's ability to take on additional risk include:
- The ability to generate wealth through active means such as entrepreneurship
- A large asset base relative to income needs
- A long investment time horizon
I fall into category 3. Having a long term horizon increases my ability to take risk. As mentioned in earlier articles, I am willing to have...